Search

Editors

Richard L. Cassin Publisher and Editor

Andy Spalding Senior Editor

Jessica Tillipman Senior Editor

Elizabeth K. Spahn Editor Emeritus

Cody Worthington Contributing Editor

Julie DiMauro Contributing Editor

Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

Bill Waite Contributing Editor

Shruti J. Shah Contributing Editor

Russell A. Stamets Contributing Editor

Richard Bistrong Contributing Editor 

Eric Carlson Contributing Editor

Bill Steinman Contributing Editor

Aarti Maharaj Contributing Editor


Connect
FCPA Blog Daily News

Entries in Adriana Koeck (3)

Sunday
May032009

A Whistleblower Blow-Up

Last month we reported a settlement in a suit by General Electric's former in-house counsel, Adriana Koeck. She claimed she was fired in retaliation for whistleblower activity protected by Section 806 of the Sarbanes-Oxley Act (18 U.S.C. § 1514A) and state law after she warned her superiors about possible FCPA violations in Brazil. She leaked information to the press about GE's alleged conduct, and GE sued her for breaching her duty of confidentiality. The terms of the settlement that ended all of the litigation weren't disclosed.

We don't have any views about the merits of the case. But we have concerns about what it might mean for company lawyers and compliance.

When lawyers allege they were fired for raising compliance concerns, they typically disclose privileged information to support their claims. They're in a tough spot -- they can only prove they were fired for retaliation by revealing the company's underlying behavior that they complained about. But by disclosing it, they'll probably breach their professional obligations of confidentiality.

All company lawyers are privy to the inner workings of their organization. They hear the secret musings about how to sell the company's goods and services. But laymen aren't always expected to know all the implications of what they're talking about; that's why the lawyers are there -- to help everyone stay on the right side of the law. So when those secret deliberations become fodder for a lawsuit, someone's expectation of privacy is violated.

In all companies, lots of different ideas are thrown onto the whiteboard to be vetted and debated, criticized and critiqued. Only a few ever make it into the field. That's how consensus-building works. But if early-stage ideas might be disclosed by the lawyers and cause trouble later on, there'll be less debate of the kind the attorney-client privilege is intended to promote. Companies paying attention to the retaliation suits might change the way they treat their lawyers and compliance professionals -- leaving them out of discussions, or worse, not hiring them to start with.

To be clear, lawyers are entitled to protection against retaliation for blowing the whistle. In fact, lawyers are especially vulnerable. They know the company's secrets and they have a duty to prevent illegal conduct from happening. But whenever lawyers, for whatever reason, go public with protected information, the profession is tarnished and the cause of compliance is hurt.

What's the fix? How about plugging the gap in SOX to make sure whistleblower protections cover lawyers (and all employees) who work at subsidiaries of listed parents? The limited coverage now is forcing claimants into federal court who might not want to be there. Beyond that, perhaps a special tribunal -- under the auspices of the Labor Department and the courts (too bad we don't have a national integrated bar group) -- with an equal measure of protection for company lawyers and for their employers' privileged information.

Sunday
Apr052009

GE Resolves FCPA-Related Private Claims

General Electric and its former in-house counsel, Adriana Koeck, who claimed she was fired for telling her superiors about the company's possible Foreign Corrupt Practices Act violations in Brazil, have settled their litigation. GE had sued her for wrongfully disclosing its confidential information, while she claimed she was fired in retaliation for whistleblower activity protected by Section 806 of the Sarbanes-Oxley Act (18 U.S.C. § 1514A) and state law.

Koeck went to work for GE in January 2006 as the lead attorney for Latin America at its Consumer and Industrial Division in Louisville, Kentucky. She was fired a year later. With respect to the FCPA, Koeck said she was sent an article in March 2006 from a Brazilian newspaper alleging that GE and a GE / Brazilian joint venture were among a number of major corporations involved in a Brazilian “bribing club.” The corporate participants allegedly met regularly to agree on how they would allocate orders from the public sector throughout Brazil, and how much they would pay as bribes. Brazilian news reports, she said, indicated that more than $20 million in bribes had been paid to more than 150 Brazilian politicians. A copy of her SOX retaliation complaint can be downloaded here.

In June 2008, however, an administrative law judge at the Department of Labor dismissed Koeck's SOX complaint, saying it wasn't filed within the 90-day time limit. That same month, GE sued her in federal court in Alexandria, Virginia. It alleged she had wrongfully disclosed the company's confidential and privileged information contained in internal e-mails, memos, and legal opinions. She claimed the documents proving her retaliation case against GE weren't covered by the attorney-client privilege because of the crime-fraud exception. She also filed counterclaims against GE, alleging illegal retaliation for her whistleblowing activity. General Electric Company v. Adriana Koeck, Case No. 1:08-cv-00591-TSE-JFA)

GE's complaint has remained under seal, along with Koeck's reply and counterclaims. But GE's memorandum in support of its motion to dismiss the counterclaims isn't sealed and can be downloaded here.

In October 2008, the court dismissed Koeck's counterclaims. A month later, she joined the settlement of a federal gender discrimination class action suit against GE (Lorene F. Schaefer v. General Electric Company, et al., Case No. 3:07-CV-0858 (PCD)). With that settlement, she waived any further claims against her former employer, and GE agreed to withdraw its complaint that she wrongfully disclosed its confidential information. Financial terms of the settlement weren't disclosed. In January 2009, GE and Koeck filed a joint stipulation of dismissal, ending their federal court litigation with prejudice, with each party paying its own costs and attorney's fees.

Last year, the Corporate Crime Reporter said the information in Koeck's whistleblower retaliation complaint was also given to the Justice Department's Fraud Section, which was conducting an initial review of the case. The DOJ has never commented publicly on the matter and GE has said Koeck’s claims were without merit.

As an aside, Koeck discharged her D.C.-based trial counsel, Bernabei & Wachtel, in August 2008. She claimed in a subsequent court filing that the firm (1) failed to abide by her explicit instructions, (2) acted in the absence of her authority; and (3) failed to communicate with her about the case. Two months before she fired the firm, it had written to her, saying “we do not believe there is a basis for [your counter-claims] . . . the real settlement value of your case to GE is resolving it and buying peace, not the potential counter-claims.” She later retained another firm to help her. Meanwhile, Koeck has disputed Bernabei & Wachtel's assertion that it has a legal interest “in any monetary settlement payments" she may have received from GE through the Shaefer case.
.

Tuesday
Jul292008

A Public Test For GE's Compliance Program

The Corporate Crime Reporter (CCR) has a story here about a Sarbanes Oxley whistleblower complaint filed against General Electric by former in-house counsel, Adriana Koeck. She says she was fired from GE for reporting fraud in Brazil to her superiors, including alleged tax cheating and potential violations of the Foreign Corrupt Practices Act. CCR posted her complaint here.

Koeck was hired in January 2006 as the lead attorney for Latin America for GE’s Consumer and Industrial Division (GE C & I) in Louisville, Kentucky. She was fired a year later. Her SOX complaint names as defendants GE, GE C & I, Raymond Burse, GE C & I’s general counsel, and Earl Jones, GE C & I’s compliance counsel.

GE is suing Koeck in federal court in Alexandria, Virginia for disclosing the company's confidential and privileged information. She claims the documents that prove her retaliation case against GE are not covered by the attorney-client privilege because of the crime-fraud exception.

With respect to the FCPA, Koeck says she was sent an article in March 2006 from a Brazilian newspaper alleging that GE and GEVISA (a GE / Brazilian joint venture) were among a number of major corporations involved in a Brazilian “bribing club.” The corporate participants allegedly met regularly to agree on which of them would be awarded which orders from the public sector throughout Brazil as well as the amounts that the corporations would pay as bribes. Brazilian news reports indicated that more than $20 million in bribes had been paid to more than 150 Brazilian politicians.

CCR says Koeck's information was also given to the Department of Justice's Fraud Section, which is conducting an initial review of the case. The DOJ hasn't commented.

GE says Koeck’s claims are without merit.

General Electric Co. (NYSE: GE) has 327,000 employees. It operates world wide as a technology, media, and financial services company, with total revenues in 2007 of $173 billion. The company was founded in 1892 -- with roots back to Thomas Edison -- and is headquartered in Fairfield, Connecticut.

.